Alibaba Tumbles as U.S. Lawmakers Question Apple AI Deal

Red Flags Over Red Tech

Alibaba’s shares took a hit this week after reports revealed its AI technology deployment in Apple products has drawn scrutiny from U.S. lawmakers. The concern centers on the possibility of data exposure to Chinese entities, prompting a bipartisan group of legislators to urge the Commerce Department to investigate. At issue is Alibaba’s role in supporting Apple’s on-device AI operations in China, where Apple reportedly partners with the tech giant to comply with local data regulations. While Apple insists that data is processed on-device and not shared, critics warn that working with a Chinese firm like Alibaba could open backdoors to sensitive user information, sparking fears over national security.

Balancing Compliance and Control

Apple operates its services differently in China to meet local laws, including storing Chinese user data within the country and working with domestic cloud providers. Alibaba’s inclusion in Apple’s AI ecosystem appears aligned with that strategy, but it now finds itself at the center of growing distrust between the U.S. and China on the tech front. As geopolitical tensions rise, tech firms like Apple must increasingly walk a tightrope between market access and political risk. The scrutiny of Alibaba’s role adds another layer of complexity to that balancing act, with potential long-term ramifications for international AI partnerships.